Hong Kong property developers move into shared office sector

Posted on 01 January, 2021 | By Property852

As demand for traditional office space decreases, Hong Kong property developers have turned their attention to the co-working sector.

Landlords are now entering the market in direct competition with long standing property businesses. This is because of the value for money and flexibility benefits that SMEs and start-ups see in this leasing model.

The amount of operators in the city has dipped slightly from around fifteen during a market peak in mid 2018 to thirteen today, while the number of centres has dropped from thirty nine in 2018 to thirty four now, according to Knight Frank.

US operator WeWork surrendered office spaces at locations like the Harbour City complex in Tsim Sha Tsui, Hysan Place in Causeway Bay and Hopewell Centre in Wan Chai, while Chinese operator KrSpace exited Hong Kong, surrendering the space of its in Times Square.

Most large businesses are actually rethinking their space consumption, with one eye on minimising costs, said Wendy Lam, the head of Eaton Club, a co working space subsidiary of Hong Kong property developer Great Eagle Holdings. These companies are actually following a "core-and-flex" strategy, with their core teams located in offices around Hong Kong's Central district and others working from flexible workspaces, an approach which is much more adaptable and also helps reduce capital expenditure.

The present economic climate suits the flexible workspace industry. "A lot of landlords are actually thinking about expanding into the co working industry]. It's possible they might open their own centres, because this particular product works," Lam said, adding that need will increase.
Eaton Club said occupancy at its co working spaces had stood between seventy per cent and eighty per cent during the last 2 years. It opened a fourth co working room this season to record demand from businesses that have downsized or perhaps are actually adopting a much more flexible real estate strategy. Its 4 centres cover 70,000 sq ft, with 3 of them centrally located in Champion Tower in Central and in Langham Place in Mong Kok. It is newest room, in Great Eagle Centre in Wan Chai, measures 1,700 sq ft and has a capacity of over 200 individuals. Areas at the centre beginning at about HK$3,000 (US$387) a month.

Lam said the co working room at Great Eagle Centre had not been opened to assist Eaton Club's parent company, and that rent and lease terms had been negotiated at market levels.
Eaton Club reported year-on-year growth of between twenty per cent and twenty five per cent in benefit and revenue in the very first one half of this season, she added.
State-owned conglomerate China Resources opened CRB, or maybe the China Resources Building Business Lounge, in October in a co working space previously occupied by Regus following some renovation work. Regus vacated the premises at the conclusion of year that is last.
As per industry resources, property developer Hong Kong Land was also going to open a co working centre. It didn't respond to requests for comment.

Other developers that have gone down this route include Swire Properties, which was established co working space Blueprint in 2014 in its Taikoo Place property in Quarry Bay. The proprietor of the V Point commercial building in Causeway Bay too operates V Co, a co working room, after the operator of its, Campfire, walked away at the conclusion of year that is last. Kerry Hotel in Hung Hom has collaborated with operator theDesk to work a co working room left by its former operator. Henderson Land has converted a space abandoned by WeWork in H Code, Central into CodeWorks, a co working space it owns and operates.

Meanwhile, co working operators like Metro Workshop are actually providing areas for as low as HK$2,500 a month for a great table in Wan Chai. Campfire actually promises to complement some lower qualified price tag that owners are able to find, it stated in an email.

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